An EU ban on imports of oil from Iran came into force onJuly 1, but the bloc exempted Eni to allow it to recouplong-standing debts it is owned by Tehran for work it undertookin the energy sector, which are being paid in oil.

The West is seeking to stifle Tehran's finances to preventit from developing an atomic bomb, while Tehran says its nuclearactivities are peaceful.

EU measures have stopped European firms, which dominate themarine insurance sector, from offering cover on Iranian crude.Industry watchers say the measure has proved to be the hardesthitting in the West's arsenal of sanctions.

"Beyond the exemption, they also need a vessel, insurance,"said a crude oil trader who added Eni had not been able toimport any cargoes from Iran since July 1.

A spokesman for the energy company declined to comment.

Several traders said the difficulty in finding an insurerfor the deliveries from Iran was the main reason that Eni hadnot received any shipments since the embargo.

"You can't even get one cargo insured," another trader said.

Iran's remaining large oil buyers, which include China, allface complications due to tight Western sanctions, which havehalved Tehran's oil exports over the past year. India, SouthKorea, Japan and Turkey, have had to issue sovereign guarantees or started using Iranian tankers.

Eni's chief executive Paolo Scaroni told reporters in Junehe expected the company to continue to take Iranian crude torecover its debts.